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The CEO of Acheron Trading believes that the rise of ordinal inscriptions and BTCFi could supplement miner revenue after the halving of Bitcoin network fees.
Despite a 50% drop in the amount of Bitcoin BTC $67,985 that is issued, the profitability of Bitcoin mining won’t necessarily decrease following the impending halving, according to Laurent Benayoun, CEO of Acheron Trading, who spoke with Cointelegraph in an interview:
It’s not clear that miners would be worse off following the halving in terms of dollars; quite the contrary… An increase in network costs will make up for the decline in mining rewards.
On April 20, the Bitcoin halving is scheduled to lower block issuance rewards from 6.25 BTC to 3.125 BTC. Smaller mining companies were driven out of business by the lower block rewards after prior halvings.
But after the 2024 halving, Benayoun told Cointelegraph, this will be different because of rising network costs driven by ordinary inscriptions and Bitcoin-native decentralized finance, or BTCFi:
NFTs have begun to appear on the Bitcoin blockchain, and several initiatives have attempted to implement DeFi on the Bitcoin network. Thus, the combination of all three factors is driving up network fees.
Bitcoin network fees are transaction costs given to miners as a reward for adding a transaction to the next block.
Joe Downie, the chief marketing officer of NiceHash, told Cointelegraph that Bitcoin mining companies would typically continue to turn a profit if the price of the cryptocurrency stayed above the $70,000 threshold.
The majority of miners will remain profitable if the price stays above $70,000 because they make money at a BTC price of more than $35,000 with the existing block rewards. If it’s less, they probably lose money.
The price of bitcoin dropped 4.3% in the previous week, closing at $66,851 at 10:22 a.m. UTC. Since April 1, BTC has been trading below $70,000, based on statistics from CoinMarketCap.
The quality and energy efficiency of a mining company’s equipment will determine its profitability even in the absence of fluctuations in the price of bitcoin. Downie clarified:
Because the computer receives less compensation for its labor, many pieces of older hardware become less profitable as a result of the Bitcoin halving. However, newer, more energy-efficient models will still be profitable; therefore, the type of mining equipment—rather than the size of the mining farm—determines this.
On March 6, the revenue generated by Bitcoin miners had its second-highest day ever, amounting to $75.9 million, following the cryptocurrency’s price surge past $69,200.
According to Benayoun of Acheron Trading, fewer mining companies will be thrown out of business than in previous cycles as a result of the rise in Bitcoin’s price and the rising network fees.
In prior cycles, such as 2017 and 2021, we observed that less productive mining enterprises were driven out of business. Due to the increase in network fees, I don’t believe this will be the case this time.
